Dread times aheadGov.: 'It's tough, but at least it's not California'

"In health care, in Medicaid--not one patient will lose their services because of our cuts. They'll come from facilities, they'll come from all kinds of services. You know, we may have more overcrowding in terms of distributing resources, but what people must remember is that we are not cutting the budget because we feel like cutting it...We have to make about $five billion in payments to schools and local governments to not-for-profits in mid-December--and we're $2billion behind because our revenues are down 36 percent.

"So the question is: How do you make up the difference?"

The Legislature and New York State dwellers are pondering the same thing.

"The $5 billion is three billion to cover this year's deficit and two billion to reduce next year's deficit; so I would think that if we get past this period; if the Wall Street revenues come in the way everyone is telling me--and I don't believe them--but they say they're coming in, then by next year, we should have the resources to replenish some of the cuts we've made.

"But if we don't make the payments, then we're going to go into default, which is the place where states like California, Arizona and Michigan are really fighting. The state of Massachusetts had to get a loan, the state of Pennsylvania couldn't pay off their budget because the Legislature was fighting over it."

What about the feedback he is receiving?

"I'm hearing about the feedback, but I asked for feedback six weeks ago--none of them have said how to cut the budget. They all said that what I'm saying is ridiculous and it's hysterical, but if you go back and you read the newspapers in July of 2008 when I said, 'We are about to go into the worst recession since the Great Depression,' they said the same thing then and we are in the worst recession since the Great Depression, aren't we?"

Asked if he thought we'd be out of the woods by next year, Paterson said, "No, no. Wall Street is temporarily up, but unemployment is still skyrocketing in this country. There's no job creation. Wall Street may be up now, but it will be back down. The question is who do you believe?"

So when will this economic decline bottom out?

"We're looking at a year away from coming out of the recession--around this time next year," the state's chief executive predicted. "The question is going to be: Which state will be in the [best] fiscal condition to rebound from the recession and go into prosperity? If we have a $10 billion budget deficit because this Legislature didn't deal with our problems, if we are in default because we didn't pay our bills....well, what happens to individuals who can't pay their bills? They get their cars taken away from them, they get their homes taken away from--and that's what'll happen to this state."

Next Monday and Tuesday in Manhattan and Farmingville, respectively, the New York State Senate Finance Committee will hold two public hearings to review the fiscal consequences of the deficit plan.